Not a secret that digital transformation is happening. And not a secret that one of the slowest, most conservative, most closed industry in the world – yes, automotive – is being disrupted too. The (new) Ubers and Teslas are popping out every day, and automotive guys are now closer than ever to Silicon Valley (e.g. BMW is using San Francisco-based Ridecell to provide car sharing in the United States). Industry 4.0 (aka smart industry) is literally happening, data driven companies are shaping new products (and new plants) at an unprecedented speed and depth of knowledge.
Given customers are rapidly embracing a full digital life, the entire automotive value chain (from Tier1s to after sales managers) is undergoing a huge digital transformation process. Sales are not an exception. With big e-commerce guys eating the world, selling a car on line on these platforms instead of creating your own e-commerce might seem obvious. But it’s not.
What is the main reason customers are buying on line from e-commerce giants? Price is not the main one. Convenience is: ease-of-use, great customer experience, different stores for the same product (which is driving competition also) and greater variety of the same category (e.g. around 110.000 results for “screwer” on Amazon.it), great customer support in case something goes wrong, fast delivery.
Now, apply this to a car. On line customer experience might be easily replicated, several tools allow to create great e-commerce websites in weeks and without huge investments. Online sales are forecast by Frost&Sullivan to account for a quarter of the new car market by 2025 in mature markets, with around one third of motorists in Britain under the age of 35 – according to GFK Automotive – would buy a car online.
A car is a unique product, if you’re looking for a new red Fiat 500 with CNG engine you’re not interested in a new blu MINI Countryman with diesel engine. You probably are going to search for it on line before buying (and 80% are doing it, according to Google). You probably are going to get a test drive before signing a contract.
If you still need a dealer (we might argue that no, you don’t but given legacy and given the huge amount of sales driven by physical dealers today, I would say yes as a carmaker you still need a dealer to sell a car… unless you start your dealers network from the scratch), you will need to send the customer to that dealer, place the real order, do the paperwork, call bak customer for delivery, manage customers in workshops after the sale.
No fast delivery, no opportunity to sell the same product to the mass (I guess you’re all familiar with the tons of different options you’re given while ordering a car in Europe), no chance to service the product on line after the sale.
Given that scenario, I would then recommend to the OEs to go digital creating their own e-commerce channel. Why would you outsource to an commerce giant? The product is yours, you manage the dealer network, you want the car to be serviced into your workshops, you wanna own the customer, you control pricing, discounts, incentives.
Selling a car on another channel is not going to increase your pipeline (compared to having an internal e-commerce). It’s not going to create a price benefit to the customer (unless as an OE you decide to squeeze margins). It’s not going to create savings (the risk is creating overheads due to new processes). It’s not going to bring the product faster to the customer. It’s not going to create a better user experience. And it’s going to piss off the dealers network, unless you ‘just’ create more leads into their buildings (but that’s a lead, not an on line sale).
The only reason you might want to do it are tactical reasons: you need to create buzz (yes, being the first on Amazon or be the best seller on Alibaba might bring press articles) and you’re not ready to sell using your own e-commerce. Tactic can last some weeks, not months right?
So if you’re an OE and you’re looking to leverage digital for selling cars, just walk away from tactic and go all in for a full digital strategy: you will own the customer, you will own the product, you will own the data. Being the “Foxconn” of cars and loose customer ownership is not what you want to do.
ps: used cars market is a complete different story. More to follow…
(originally published on my LinkedIn profile)